If the Probability of Collection Is 65%,should You Grant Credit

question 71

Multiple Choice

If the probability of collection is 65%,should you grant credit to a customer wishing to purchase a $2,000 item that cost $1,333.33 to produce? Assume all cash flows are discounted to present value and there is no chance of subsequent sales.

• A) No; the expected loss is $33.33.
• B) No; the expected loss is $150.00.
• C) Yes; the expected profit is $33.33.
• D) Yes; the expected profit is $150.00.

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Definitions:

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The largest Christian church, led by the Pope, with a global following and significant influence in religious, cultural, and political matters throughout history.

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